1. According to the Case-Shiller Index (publ. by Standard & Poors), home prices in the Portland...

1. According to the Case-Shiller Index (publ. by Standard & Poors), home prices in the Portland metro area in March 2012 reached an index 129.01 (compared with the base year value of 100.00 in January 2000). This compares with a local market peak of 186.51 in July 2007. Compare a house that sold for $400,000 in July 2007 to its possible price in March 2012 by applying the Case-Shiller Index. State the price and the loss in market value as a percentage of peak.

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Expert Solution

Answer:

House sold in July 2007 for = $400,000

Case-Shiller Index was186.51 in July 2007.

Case-Shiller Index reached an index 129.01 in March 2012.

Possible price in March 2012 by applying the Case-Shiller Index = 400000 * 129.01/186.51 = $276,682.22

Loss in market value as a percentage of peak = (400000 - 276682.22) / 400000 =30.83%

Hence:

Possible price in March 2012 by applying the Case-Shiller Index = $276,682.22

Loss in market value as a percentage of peak = 30.83%

jeff jeffy answered 2 years ago

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